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A Note on Workers’ Compensation in Bangladesh, where it is and where it can be

“It should be a fundamental responsibility of the State to emancipate the toiling masses – the peasants and the workers – and backward section of the people from all forms of exploitation”

– Article 14, Constitution of the People’s Republic of Bangladesh

Who is responsible for compensating the workers of Ether Tex Limited, New Wave Bottoms, New Wave Style, Phantom Apparels and Phantom-TAC, following the collapse of Rana Plaza? With the death toll surpassing 1200 and the injured numbering in the thousands, the question of compensation for the victims and their families is one that demands immediate and urgent consideration

Though the public of Bangladesh have, to their immense credit, come forth en masse to assist those, alive or dead, buried in the rubble; from removing debris with their bare hands, at considerable personal risk, to donating blood, food, money and oxygen to fundraising for victims’ families, the responsibility for compensation does not rest with them. We should not be in a situation where the BGMEA president accepts a Tk. 25 lakh cheque from the workers of Sharmeen Group; each of whom forfeited one day’s salary to express solidarity with their fellow workers. (1) Neither should the granting of such compensation by employers be seen as an act of generosity or charity; a manifestation of noblesse oblige, where an honourable master takes care of his injured servant.

In an ideal situation, the avenues through which these workers and/or their families could seek compensation would be through an insurance claim, or if insurance is not available, through the labour law of the country. It goes without saying that such options are either difficult to attain or not available at all for those who worked in Rana Plaza.

In the Note below, I will be outlining the current position in Bangladesh on employees’/workers’ insurance and the provisions that exist for workers’ compensation under Bangladesh law, with particular consideration of how the collapse of Rana Plaza indicates the weaknesses of such laws and norms. I will also make some tentative suggestions on how such a status quo may be improved and briefly evaluate some of the reforms that have already been proposed.

The definition of worker

At the outset, it is important to clarify what I mean by ‘worker’ in the context of this Note. Since, for the most part, I will be considering Bangladeshi workers; I will apply the definition used in Section 2 (lxv) of the Bangladesh Labour Act, 2006:

“‘worker’ means any person, including an apprentice, employed in any establishment or industry, either directly or through a conractor, to do any skilled, unskilled, manual, technical, trade, promotional or clerical work for hire or reward, whether the terms of his employment are expressed or implied, but does not include a person employed mainly in a managerial or administrative capacity.”

Insurance for Employees

As the Daily Star reports on 29 April, 2013, though the owners of the five factories had fire and marine insurance to cover their export-import business, they did not insure their workers. While there is no ostensible obligation under the law of the country to provide commercial medical or life insurance for each individual worker, Section 99 of the Labour Act, 2006, read with the Compensation Act 2005, makes it compulsory for there to Group Insurance for establishments where there are more than 200 permanent workers. This would allow workers to claim Tk. 1,00,000 and Tk. 1,25,000 for death and permanently total disablement at work respectively, or in other words, the same compensatory sums as set out in the Labour Act. For this, depending on the number of workers, each owner would only have to pay between Tk. 12,500 to Tk, 1,00,000 per annum. (2) Despite the convenience and relative affordability of such group insurance, it clearly was not obtained by any of the five factories in question, but this should hardly be surprising as more than 1200 export-oriented RMG factories out of the 3400 active member-factories of the BGMEA did not have group insurance as recently as November, 2012. Though the BGMEA had issued a circular in 2005, stating that those who did not obtain such insurance would not be provided with any facilities such as the issuance of “UD” and “UT” certifications, needed for export of RMGs under GSP facilities, it is nonetheless a weak form of protection as many of the RMG exports are to destinations outside this remit. (3)

The Bangladesh Garment Manufacturer and Exports Association (BGMEA), of which the five factories are members, provide group insurance for their member factories, whereby employees get Tk. 1 lac (Tk. 100,000) in compensation if there is an accident. However, this insurance only covers 20 workers. (4) This was clearly insufficient for all of the factories as, even according to the BGMEA’s own directory, 377 workers were supposed to be in the Ether Tex factory, 526 in New Wave Bottoms, 1073 in New Wave Style, 739 in Phantom Apparels and 407 in Phantom-TAC. (5) We are therefore left to surmise that the garments the workers’ stitched, buttoned and labeled were considered to be more precious, more worthy of insurance than the workers themselves.

This is not to say that there aren’t RMG factory owners who insure their employees, but I am of the opinion that workers’ insurance is not a choice to be made arbitrarily by a kindly supplier but should be made a legal obligation. This is not a new demand, with many Trade Union leaders in the apparel sector have been strident in their call for compulsory insurance for all listed and non-listed factories in the country. (6) As a country whose Constitution enshrines ‘socialism’, meaning an economic system “with a view to ensuring the attainment of a just and egalitarian society, free from the exploitation of man by man”, (7) as one of its fundamental principles, it would be becoming of our legislature to pass an employees’ social insurance law that forwards such principles and is equitable to those who play a critical role in driving our economy. We can perhaps learn from the example of employers in countries with strong social welfare policies, if there is a will to do so.

In Australia, for instance, the Government of the State of Victoria has put in place an insurance system, pursuant to the Occupational Health & Safety Act 2004, Accident Compensation Act 1985 and the Accident Compensation (WorkCover Insurance) Act 1993, where most employers have to pay a percentage of the total remuneration they give their employees (i.e. wages, salaries, benefits etc.) to WorkSafe Victoria, which covers the costs of benefits if their workers become injured or become ill because of their work. (8) These benefits may include weekly benefit payments, medical treatment, rehabilitation costs, legal costs, or, in the event of a serious injury, lump sum compensation. (9) Furthermore, if the worker suffers a work-related death, then their dependants will be entitled to burial/cremation expenses, family counseling services, lump sum payments to dependants, weekly pensions for dependents for a fixed number of years and damages. (10) While eyebrows may be raised at such benefits and some might wonder how high the premiums for such insurance would be, the fact that the average WorkSafe insurance premium rate is only 1.298% of total remuneration, the lowest in Australia, indicates that they are not as onerous as they first seem. This is because each industry is set an ‘industry rate’ based on the risk such an industry entails and it is only the larger employers, i.e. those who pay remuneration greater than AUD $ 200,000, that have to be concerned about the number of successful claims made by their workers. In other words, the larger the business, the greater the influence a ‘claims experience’ (11) can have and the riskier the business, the higher the industry rate. This would seem to be in line with most employers’ insurance the world over but what really stands out about this scheme is its obligatory nature; whereby severe penalties are imposed on employers if they do not join the scheme and their employees get injured in the line of work. Similarly, if premiums are not paid or if premiums are not paid promptly or if employers provide incorrect/untrue self-assessments so as to underpay their premiums, strict sanctions are enforced. This has a substantial impact in ensuring equitable relations among employers and employees, making non-compliance unprofitable and compensating the insurance scheme of the funds it has been deprived of. (12)

Alternatively, if one wants to obviate the inherent risks of self-evaluation and self-assessment, a path similar to the one recently treaded by Brazil could be considered. Under the tenure of its previous President Luis Inacio Lula da Silva, Brazil implemented Occupational Accident Insurance (Seguro de Acidente do Trabalho or SAT), whereby those that cause accidents or do little to prevent accidents are charged a higher rate of taxes than those who invest in accident prevention. This has marked a shift from ‘damage control’ to prevention and rehabilitation. (13)

If it is felt that such a requirement should not be imposed solely on employers, a self-financing model, similar to that extant in India could be considered. The Employee State Insurance Act 1948 [ESIC], came into force in 1952 in just two industrial centres, Kanpur and Delhi, but is now applied across India, in 230,000 factories and establishments and benefiting roughly 32,000,000 people. (14) The reason for this wide coverage is that the Act applies to all workers who earn less than Rs. 6,500 per month in non-seasonal, power using factories/manufacturing units that employ ten or more persons and non-power using establishments employing twenty or more persons. The term ‘establishments’ is widely construed with shops, hotels, restaurants, cinemas etc. falling within its ambit and notably, no industry can opt out of the scheme. (15) The process of becoming covered under the scheme is not an overly complicated one either and occurs simultaneously with a worker’s entry into employment. The financial resources for this scheme are not raised from the taxpayer or solely from the employer, but through contributions from employees and employers as a fixed percentage of wages: covered employees contribute 1.75% of their remuneration and the employer pays the equivalent of 4.75% of the workers’ remuneration to the scheme on a monthly basis. (16) Over the years, through these funds raised, the scheme has enabled the establishment of 138 hospitals with 26,000 beds, 1,442 dispensaries, 300 diagnostic centres, five occupational disease centres in the main industrial metropolises of the country and 840 local and cash offices. (17) This comprehensive infrastructural network has allowed the dispersal of social security benefits to those suffering from occupational diseases or accidents and to the family of those who have died due to an employment injury or occupational disease. From the first day of entering insurable employment, the worker and his/her dependents can receive medical benefits and if the worker passes away, the dependents can also receive a family pension. Moreover, the insured employee may draw, within certain terms and conditions, sickness benefits, maternity benefits, disablement benefits, dependent benefits, etc. all in cash. (18) While these sums might not be considerable, it is at least a form of assistance that is not contingent on the arbitrary publicity or charity that a widely reported disablement or death might draw. Instead, it would become an organic feature of the industry.

In light of the Rana Plaza collapse, it is of particular interest to note what benefits the employees of the five factories, both injured and dead, would have accrued if they were insured under the ESI Act. In such a hypothetical scenario, the victims would have to prove that they were ‘employees’ at the time of the Accident and that they received less than a certain, fixed sum, indicative of their financial need. On the basis that such criteria is fulfilled, those temporarily disabled would receive 70% of their wages for the duration of their disablement, those permanently disabled would receive a cash benefit that is payable for life and is calculated on the basis of earning capacity by a medical board and the family of those deceased, i.e. the widow/widower, son/daughter, mother, would receive 70% of the worker’s salary, distributed at a fixed ratio, on a regular monthly basis. Other ancillary benefits such as a free supply of physical aids and appliances, vocational rehabilitation for those partially disabled and funeral expenses for those deceased, would be made available under the scheme. (19) After perusing this Act, we can compare its provisions to those contained in the current labour legislation of Bangladesh and we would find it to be far less accommodating to worker interests and ultimately far less egalitarian.

Workers’ Compensation Regime in Bangladesh

There have been statutory provisions for workers’ protection in the Indian subcontinent since at least 1881, when the Factories Act, 1881 was passed, and legislation for workers’ compensation since the enactment of the Workers’ Compensation Act 1923. In the subsequent decades, numerous labour laws have been passed, including the Workmen’s Protection Act, 1934, the Employer’s Liability Act, 1938, the Employees Social Insurance Ordinance, 1962, etc. many of which have now been replaced with the Labour Act, 2006. Of the few labour laws that remain in force since the adoption of the Labour Act, 2006, and is pertinent to this note, is the Fatal Accidents Act, 1855, which will be also be considered in relation to this section.

The need for a comprehensive Labour Code has long been apparent, with especial attention needing to be directed to the development of industries, investment of capital, productivity, compliance with international labour regulations and more equitable employee-employer relations. Through the initiative to form such a Code commenced in 1992, with the formation of a National Labour Law Commission, it took 14 years to bear any fruit. According to a Research and Advisory Team of the Bangladesh Institute of Labour Studies (BILS), this new Code is considered an advance because “it removes certain ambiguities in the old and diverse labour acts and aligns the labour law system with the ILO core conventions”, is more “comprehensive and progressive” and is more widely applicable. (20) Even so, if one reads the Bangladesh Labour Code, particularly the provisions on benefits accruing to a worker’s dependants upon his/her death or ID cards, one would be troubled by the fact that such legislation was not passed earlier. Even when analysing the two methods through which compensation can be obtained under section 150 of the Labour Act, certain conceptual and practical flaws become evident.

Methods & Processes for Workers to obtain Compensation in Bangladesh

The two courses open to a worker, who has suffered an injury arising out of and in the course of his or her employment, are making a claim for compensation under Chapter XII of the Labour Act or filing a civil suit for damages against the employer.

For compensation to be granted under either of these grounds, four conditions must be proven to exist: (i) that a personal injury was caused to the worker, (ii) that such injury was caused by an accident, (iii) that the accident arose in the course of employment, and (iv) that such injury has caused either the death of the worker or his/her total or partial disablement.

Compensation under Chapter XII of the Labour Act

The phrase ‘personal injury’ is widely construed in Bangladesh case law, with it not being confined to physical injury but also including nervous shock, mental injury or strain which affects the heath of the worker (21) and even nervous shock caused by alarm resulting from a fatal accident to a fellow worker. (22) Similarly, the term ‘accident’ is widely defined, to not only include obvious examples such as collisions, collapsing roofs, etc. but any unexpected occurrence which produces hurt or loss, (23) which was not designed by the worker him/herself. (24) To be able to satisfy the condition that the accident arose out and in the course of employment, it must be proved that at the moment of the accident the employee was obliged to be present on that site by the express or implied term of contract of his service, that he was there in his capacity as an employee, that he was at the time under the control or direction of the employer, that his presence at the spot was incidental to his employment and there was a proximate connection between the employment and the accident. (25) This is further explicated by the test laid down by Lord Summer in the English case of Lancashire and Yorkshire Rly. Co. v. Highley (26):

“was it part of the injured person’s employment too hazard, to suffer or to do that which caused his injury? If yes, the accident arose out of his employment. If no, it did not, because what was not part of the employment to hazard, to suffer, or to do, cannot well be the cause of an accident arising out of the employment. “The decision,” says Lord Atkinson, “must turn on whether the workman was, when the accident which injured him occurred in the course of performing some duty arising out of his contract of service which he owed to his employer.”

In other words, there must be a causal relationship between the accident and the employment. (27) Once the accident occurs, the worker has to serve a written notice of this to their employer at the earliest possible date, indicating their name and address, the date of the accident and the cause of the injury, as well as a claim to the Labour Court within two years. (28) Alternatively, if the Labour Court receives information from any source that a worker has died as a result of any accident arising out of and in the course of his employment, the Court may send a notice to the employer requiring them to submit a statement within 30 days, containing information about the death of the workman, whether he believes he is liable to deposit compensation for the workman, etc. If the employer does not proffer compensation, then the Labour Court can conduct an enquiry and inform the dependents of the worker whether they should make a claim for compensation. (29)

If the first three conditions for compensation are satisfied then the question of placing a figure on the compensation arises. Section 151 of the Act indicates that the amount of the compensation depends upon the gravity of the injury and the nature of disablement and how it impacts the employment opportunities of the workmen concerned. If the worker dies, then the dependents would be paid Tk. one lac (Tk.1, 00,000), no matter the monthly wages. If there is a permanent, 100% loss of earning capacity, i.e. the worker cannot perform any kind of work ever again, then there is permanent total disablement and he/she will be entitled to Tk. one lac twenty-five thousand (Tk. 1, 25,000). This could be in the form of a loss of a hand, a foot, both eyes etc. as specified in Schedule I of the Labour Code or a combination of injuries specified in the Code that amounts to a loss of earning capacity of 100% or more. However, the compensation would be reduced if it is possible for such a severe injury to be cured or if the injury is temporary in nature. Other injuries that are less severe would fall under the head of partial disablement, either permanent or temporary. According to Halim, “‘partial disablement’ means, where the disablement is of a temporary nature, such disablement as reduces the earning capacity of a worker in any employment in which he was engaged at the time of the accident resulting in the disablement, and where the disablement is permanent in nature, such disablement as reduces his earning capacity in every employment which he was capable of undertaking at that time.” (30) Schedule I of the Code specifies many injuries that would be categorised as partial permanent disablement, such as the loss of a thumb, loss of toes, etc. The schedule also indicates the compensation that is due as a percentage of the compensation that would have been payable in the case of permanent total disablement. For instance, if a worker loses a thumb he/she is entitled to 30% of what he/she would be owed if he/she became permanently totally disabled, i.e. Tk. 37, 500. If a workers’ partial disablement is temporary, a monthly payment is made on this basis: full pay for the first two months, two-thirds pay for the next two months and half-pay till the end of his/her convalescence. In any event, such disability benefit will not be paid for more than 12 months in total. (31)

This compensation, once secured, has to be paid by the employer to a Labour Court, which then takes on the role of distributing it among the worker and his or her dependents.

Few would argue that such compensation, once secured, is actually adequate for an injured worker or their dependents, given the rise in the price of basic commodities, house rents, medical treatment, transport costs and education. Whether 1,00,000 or 1,25,000 or a fraction thereof, they are negligible sums, given the impact that the loss of ability to work – usually of the primary bread winner – has on an entire family. The magnitude of the loss is difficult to quantify, regardless of whether the worker was a trainee on the lowest pay scale or a Grade 1 worker earning more than 9,000 Taka per month.

Rubana Huq, a RMG factory owner, in an article in the Wall Street Journal, considers the bare minimum requirements of the ‘nuclear family’ of a garments worker, i.e. one female RMG worker, one rickshaw puller husband and one child. She estimates that such a family would need, at the very least, US$ 40 (~Tk. 3,200) as house rent and US$ 38 (~Tk. 3,000) for food. (32) Note that this admitted to be a bare minimum and not a ‘livable’ wage as is commonly defined. (33) Academics such as Jakir Hossain, provide more elaborate estimates, as they opine that wage setting, and through logical extension, compensation determination, should be done on the basis of livable wages; wages that allow the worker and their dependents to graduate the poverty line and a certain amount of economic security and enjoyment, not just the bare minimum for sustenance. (34)

Hossain arrived at his estimate by holding that the average Bangladesh household – thus the average RMG worker household – has 4.8 people. This figure is derived from the household size in the 1991 Census and is far more realistic than the 3 person nuclear family depicted by Huq. He defines a basic livable wage as including the cost of 2122 calories of food per day, house rent, medicine, transportation, education, entertainment, etc., if none of the above is provided by employers or the State. He, in October 2009, estimated that to meet even the most rudimentary of these needs, would require Tk. 4,378.02 per month. (35) This sum would not ensure a decent standard of living but would ensure that the abovementioned heads are barely met. It is necessary to point out that this figure is reached by calculating only Tk. 906.23 for housing, which is likely to be much higher now, given inflation, shortage of housing, etc. (See, for instance, the testimony of Shana K—, who rents a room made of corrugated iron sheets in Mirpur for Tk. 1,500 (~$US 19) per month. (36)) This calculation could be further skewed if the RMG worker is the sole breadwinner in a family of 4.8, rather than one of the contributors. His calculation also allocates Tk. 3095.95 for food, under the assumption that such a cost would be shared, but if the RMG worker was the sole earner, to provide 2122 calories to a nuclear family of 4.8 members would roughly cost Tk. 7059 (~US$ 90.5) per month or Tk. 1470.60 (~US$ 19) per person, sums that are well beyond their reach. If these estimates sounds ‘generous’, it is worth remembering that as of October, 2008, the average prisoner in a Bangladesh jail, who receives the minimum sustenance required to live, received Tk. 1571.7 per month worth of food. (37)

These estimates on what would be a livable wage in the current context in Bangladesh, places into perspective the cost of even the simplest food, shelter and needs, and how current wages are grossly inadequate for sustaining anything but the barest standards of living. Similarly, the statutory compensation sums, given this cost of living and the size of the nuclear family, would not be able to cover expenses for more than a few months. At best, it could be a contribution towards starting up a small business. (38)

It is for this reason that various groups and academics have concluded that much greater sums would need to be paid out to adequately compensate the victims of large-scale industrial accidents, like that in Rana Plaza. Factors such as loss and suffering caused, inflation, promotions, wage increases, etc. would need to be accounted for. Some Labour Rights groups have estimated that long-term compensation payments for the victims of Rana Plaza should amount to around US$ 71 million, based on BDT 500,000 (US$6,423) for pain and suffering per worker, and loss of income based on an average salary of BDT 5833 per month (which includes two months bonus per year) for 10 years (injured workers) and 25 years (deceased workers), with wages being adjusted for inflation. (39) Other studies used the BGMEA pay scale as a guide to calculate compensation for those deceased at each grade and considered the income that the worker would have brought in if alive till the age of retirement – suitably adjusted to current market wage, inflation, interest rates and wage increments through promotions – in their calculations. The figures they arrived at were even larger, with the lowest compensation being paid to those who were 35 and above at Grade 3 employment at the time of their death, who would thus lose approximately 10 years of employment. According to these calculations, they should roughly receive Tk.8,99,000 ($11,515) (40)

Evidently, the general principle that governs the statutory requirement to grant compensation is that “liability for payment of compensation is not dependent upon the neglect or wrongful act of the employer but a statutory compulsory obligation to compensate the workman for the loss of wage earning capacity before and after the injury is suffered by him.” (41)In other words, due to such strict statutory liability, the doctrines of contributory negligence, assumed risk or the fellow servant rule as they exist in Tort law, do not apply in this particular context and workmen are unable to relinquish their right to compensation, even if they choose to do so. The reason behind this is that as the work is undertaken primarily in the interest of the employer – with the workmen offering his labour for consideration – and ultimately in the interest of the public – who enjoy the fruits of his labour – the burden of compensation should be transferred on to them.

Doing so places an implicit obligation on society to pressurise industry to ameliorate dangerous working conditions, but this is inherently flawed as the public cannot be expected to rigorously monitor and hold accountable employers on a continual basis and even when public scrutiny it is attracted, as it has following the collapse of the Rana Plaza, it is likely to have great collateral damage for the entire industry, not just the culprits. (Note the hundreds of articles/reports published by 100s of mainstream and alternative news media over the past few months on the topic and the scathing Canadian advertisement, promoting that their Company does not sell anything from Bangladesh (42)) At the same time, without any such consumer pressure, employers will be lax about paying any such compensation – as has been demonstrated multiple times in the past (43) – and workers will have to take recourse to civil action to enforce their right to compensation. The insertion of strict statutory liability was for the purpose of ensuring prompt compensation and to help workers avoid expensive and lengthy litigation, but this purpose is defeated if they have to take civil action to enforce their rights. Instead, if employees’ social insurance was implemented, the claims process would be more low-profile and routine; the distribution of the cost of compensation would be spread between the employers, workers and State simultaneously and the obligation to prevent such occurrences so as to avoid such payouts would create pressure on the State to adopt more precautionary industrial measures and strictly enforce those measures that already exist.

It is worth mentioning at this juncture that aside from the compensation due to a worker for dying in an accident, workers who die after completing 3 years of continuous service with an employer, shall be entitled to get benefits for 30-days’ wages for each completed year of service, in addition to whatever other emoluments would accrue to them if they had retired from service. (44)

Compensation through a Civil Suit for Damages

A civil suit for damages is the other option that a worker may utilise to obtain compensation. Such a suit allows them to apply the law of Tort and the provisions of statutes such as the Fatal Accidents Act, 1855 (45)

The Act allows for an action to be brought “wherever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect, or default in such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof.” (46) The wife, husband, parent and child of the person who died in a fatal accident will be entitled to the benefits of the action and the proceeds, whatever they may be, will be divided among these parties by court order, once the costs and expenses are deducted.

As compared to statutory compensation, civil actions, theoretically, allow for greater sums to be claimed, as damages are calculated so as to be proportionate to the loss resulting from such death to the wife, husband, parent and child, however, the burden of establishing the extent of the loss is also on these parties. According to Dhar, this might involve a tricky balancing exercises, where “[t]he pecuniary loss can be ascertained only by balancing on the one hand the loss of the claimants of the future pecuniary benefit and on the other pecuniary advantage which from whatever source comes to them by reason of the death, that is, the balance of loss and gain to a dependent” (47) (Emphasis mine) This would involve considering any insurance payments made to them, any sums given to the dependents by charities or public bodies, etc. Therefore, in the Rana Plaza incident, the sum granted by a civil court might be less than that offered to a claimant whose relative suffered a fatal injury in an accident that didn’t receive public donations. This burden on the claimant is not only with regard to the extent of loss but with regard to negligence as well. There is an exception to this rule, and the Rana Plaza incident arguably falls within the ambit of this exception, “that wherever the facts already established are such that the proper and natural influence immediately arising from them is that the injury complained of was caused by the defendant’s negligence, or where the event charged as negligence “tells its own story” of negligence on the part of the defendant, the story being so told being clear and unambiguous” (48) the defendant then bears the burden and has to show how the act complained of could reasonably happen without negligence on his part. A strong argument could be made for the negligence being directly attributable to the building owner and factory owners in the instance in question and so the burden may rest on them to show how Rana Plaza collapsed without their negligence.

After a careful consideration of the above in a Civil Court, if a claim is successful, then the Court has to consider: the wages the deceased was earning; the regularity of the deceased’s employment, how long he or she would have worked; how much was required or expended for his own personal use and living expenses, etc. The sum that is thereby reached could then be affected by factors like how long the dependents would remain as dependents, e.g. if a widow(er) remarries, children grow up, etc. (49)

If we look closer at one of the aforementioned studies on compensation for RMG workers following Rana Plaza, it was estimated that:

“Workers of age 20 years and below, should receive a minimum compensatory amount of Tk.29,35,000 ($37,594) (grade 7 at the time of the accident) and a maximum of Tk.54,74,000 ($70,116) (grade 3 during the accident), for 30 years equivalent of wages lost;”

These figures were based on the assumption that the worker is deceased, not permanently or temporarily injured, with the workers of the study opining that the permanently injured should receive an even higher compensation amount as the recurring costs of medical treatment and rehabilitation have to be factored in. All of these figures were based on data obtained from government reports and garment industry sources and were reached after considering factors such as income that the worker would have brought in if alive till the age of retirement, adjusted to current market wage, inflation, interest rates and wage increments through promotions. (51)

It is apparent that such estimates far exceed the compensatory sums provided by Statute. It is also likely that such sums would not be obtained through a civil suit, given the aforementioned considerations of the court and the fact that very few workers serve in any one factory till retirement, receive regular promotions or have their salaries scaled to inflation and interest rates every year. The actual, net salaries of the workers may also substantially differ from the gross salaries used by the researchers in calculating their estimates. Thus, while these figures embody what a worker would receive in an ideal scenario, it is not a reflection of the compressions process as it stands today.

While there are certain benefits for commencing a civil action, it is an option that is less desirable as it allows employers to use defenses from Tort law, is fraught with more risk and is more costly. In particular, the risk arises that a defense like volenti non fit injuria or the doctrine of assumed risk would be argued, whereby employers would contend that workers knew the inherent risks of their industry when joining it and employers are only obligated to meet the safety standards as they exist in the industry. While this defence is not as far-reaching as it once was, there is still a possibility that it might be used in a country like ours, with a nebulous compensation culture, to deprive workers of the benefit due to them. On the other hand, if such an action is successful, then the damages recovered might be substantially higher than that recoverable under statutory compensation.

Shortcomings of the Code

In spite of such options existing under the Code, as has been illustrated by the reports, studies and pacts following past industrial disasters, they have not manifested into remedies for the workers of this industry. A significant number of workers continue not to get appointment letters and written contracts (52), many workplaces continue to take insufficient measures to prevent further accidents at the workplace and even that only to keep up appearances before global buyers (53), safety facilities are often inadequate for the number of workers present, and inspections continue to be rare, with the few occurring only after accidents take place. (54)

Most significantly, though the Government has been empowered by the Labour Act, 2006, to appoint Inspectors to enter, inspect and examine workplaces, and under Section 61, ascertain compliance with safety requirements, including the soundness of buildings; such inspections have been woefully inadequate. They are further entrusted with the power to direct structurally unsound factories to take necessary steps to remedy such a defect and if there is a particularly significant threat to human life, to close down the factory altogether. Though the Labour Ministry in their defense, contends that there is insufficient personnel to inspect all of Bangladesh’s RMG factories, that does not reduce their culpability. (55) Given that the Rana Plaza had visible structural defects, was built on a weak foundation and was not compliant with building codes, it is clear that the inspectors of the five factories in question did not appropriately discharge these functions, with the sad irony being that said functions were incorporated in the Labour Act because of earlier large-scale accidents that had occurred in two factories in Savar, where numerous workers had died. (56)

The Future of Compensation in Bangladesh: Prevention & Rehabilitation

The intense media scrutiny following the collapse of the Rana Plaza has placed RMG manufacturers, the Government and global retailers in a tight situation: the need for reform in the industry is unarguable, but how is that to be done without destabilizing its very operation? The pressure generated by such scrutiny has seen each of the aforementioned players propose their own road-maps for improved conditions for employees and more balanced employer-employee relations. The Cabinet has approved a draft of the Bangladesh Labour (Amended) Act, 2013 on 13 May, 2013, (57) the International Labour Organisation have begun developing an Action Plan for labour reform, in consultation with the concerned employers, employees and the Government of Bangladesh and an ‘Accord on Fire and Building Safety in Bangladesh’ has been signed by dozens of international retailers (58). These measures seek to augment other recent initiatives, such as the ‘National Tripartite Plan of Action on Fire Safety’ adopted by the Government of Bangladesh, employers and workers’ groups following the Tazreen Factory Fire

These proposals thus far do not address the issue of compensation in considerable detail but demonstrate how the need for mass compensation can be bypassed through effective prevention measures and how rehabilitation of workers, who are still alive, if just as important as monetary compensation.

Following meetings between the Government, employers and employees and the International Labour Organization (ILO) between 1 May, 2013 and 4 May, 2013 and a Resolution therewith, the Government agreed to reform the Labour Act, 2006, particularly with regard to freedom of association and collective bargaining and occupational safety and health. The full text of the Amendment is not yet in the public domain, as it has yet to go through the legislature, but various news sources report the salient changes as being: “giving the scope for trade union” (Cabinet Secretary Mohammad Mosharraf Hossain Bhuiyan quoted in the Financial Express-BD) (59), the Government declaring a minimum wage structure for industrial workers and paying their wages through an electronic transfer to their bank accounts (The Independent BD) (60), bringing outsourcing companies under registration to improve management of companies, making group insurance mandatory for factories that have more than 100 workers, one a half months gratuity for every year of service for workers who have been in service for more than 12 years, introducing healthcare facilities and a welfare fund for the workers of export-oriented garment factories and maintaining consistency between structural designs and outlays of factories (Cabinet Secretary Mohammad Mosharraf Hossain Bhuiyan quoted in Bangladesh Sangbad Sangstha) (61).Without reading the full text of the Amendment, it is not possible to give a fuller comment but it would appear from such reports that most of these changes are neither new nor particularly radical. Section 176 of the un-amended Labour Act already allows for workers to form Trade Unions and Section 195 protects workers’ rights to do so, Section 205 of the Act made the creation of Participation Committees in small industries mandatory, Sections 26 and 27 provide for the payment of gratuity equivalent to 30 days wages for each year of a workers’ tenure of service and Section 234 provides for the creation of workers’ welfare funds in companies which have more than a 100 workers in a year, in excess of Taka one crore in paid-up capital and Taka two crore in fixed assets – a category which most RMG exporters would fall into. One of the few novel insertions into the Act would be the requirement for factories that have more than 5000 employees in all their concerns, to set up a healthcare centre. We can thus see that the framework already exists and this Amendment would be an embellishment on existing clauses, and not always a positive one, as some of the sections of the proposed Amendment are questionable with there being provision for owners to terminate workers for “obstruction to work” and termination of employment without compensation of workers who are absent for 10 days without notice, while at the same time, the obstacles preventing workers joining trade unions have not been removed. (62) Moreover, despite the strong concern over prompt compensation and rehabilitation of injured workers, these issues have not been addressed in the Amendment.

Therefore, on the face of it, most of the changes incorporated by this new Amendment would only expand the scope of existing sections or insert a particular focus on the RMG industry – which while being commendable does not resolve the dual issues of compliance and enforcement. It is here that stakeholders in the industry such as global retailers, international labour rights organisations, along with employers and employees can play a key role.

More than three dozen global retailers, who purchase garments from over a 1000 factories in Bangladesh, have signed an Accord, as part of just such an effort to ensure safe working conditions in Bangladesh (63) The Accord is a multi-pronged initiative on the part of the signatory global retailers to promote, implement and finance health & safety measures in the factories they source RMGs from. It is not an agreement that is independent of other efforts, but rather one that seeks to complement and build on those that already exist; in particular, the aforementioned National Action Plan for Fire Safety in Bangladesh.

In sum, the Accord seeks to finance and implement a programme that will require the Bangladeshi suppliers of the signatories to:

implement remediation measures in factories deemed to be dangerous by such inspectors, (Paragraph 12)

provide fire safety training, (Paragraph 16)

pay regular incomes to workers during periods when factories are being renovated, (Paragraph 13)

make an effort to relocate workers to safe factories if they lose their jobs due to a loss of orders, (Paragraph 14)

compel local companies to respect the right of the worker not to work if they feel that the working conditions are not safe, (Paragraph 15)

encourage the establishment of a protocol seeking to ensure that suppliers which participate fully in the inspection and remediation activities of the Agreement shall not be penalized as a result of the transparency provisions of this Agreement. (Paragraph 20) (64)

In turn, the signatories will help ensure that it is financially feasible for these factories to maintain safe working conditions and will commit to maintain long-term sourcing relationships with Bangladesh.

Under the Accord’s terms, it is envisioned that a Steering Committee (SC) (Paragraph 4), consisting of Trade Union representatives and signatory Companies, will be constituted with the responsibility to administer and manage the terms of the Accord, while dialogue will be facilitated between brands, retailers, suppliers, Government institutions, trade unions and NGOs by an Advisory Board (Paragraph 6). In addition, the signatories will require Health and Safety Committees to be established in each of the factories under the Accord (Paragraph 17) and those particular factories which produce a large percentage of a signatory company’s annual RMG production in Bangladesh will also be provided with substantial fire and building safety training. Finally, an Inspector(s) appointed by the SC will also be entrusted with a number of responsibilities, including:

inspecting the factories under the aegis of the Accord, (Paragraphs 8-9)

Despite the existence of such clauses, certain issues with implementation subsist. The Accord does not lay out how the Advisory Board will function and what its relationship will be with the SC and neither does it specify what the functions of the Health & Safety Committees should be. It is hard to comprehend why fire and safety training is to only be provided in certain large factories, as smaller factories can be just as prone to industrial accidents. Furthermore, as has been mentioned above, the post of Inspector already exists under statute and questions may arise about whether the independent Safety Inspector’s duties may conflict with those of the Chief Inspector of Factories and Establishments. It is also likely that this new Inspector will also be plagued with insufficient resources and manpower, especially given the tight deadlines set by the signatories for compliance. Over a thousand factories are already subject to this new Accord, with more likely to be added, yet Paragraph 9 of the Accord requires that an initial inspection of each of these factories should be carried out within the first two years of the term of the Accord. They would then have to prepare written inspection reports, documenting their findings, within 2 weeks of each inspection. Conducting thorough inspections and filing detailed reports within such a short time frame would be a Herculean task, even if a sizeable team of suitably equipped Inspectors were appointed.

Despite these difficulties in implementing such an Accord, the penalties incorporated in it may suffice to pressurize factories in breach of safety standards to mend their ways as a preventative measure. According to paragraph 21, if a supplier fails to comply with the terms of the Accord, the signatory company will promptly implement a notice and warning process leading to termination of the business relationship, if these efforts do not succeed. This strict approach coupled with strong, financial penalties may compel greater compliance from factories, than even governmental sanctions and legal action would.

In spite of some sections of the Accord being legally-binding, as is the nature with such agreements, the efforts of such signatories may lose steam as months pass and the focus shifts away from Rana Plaza. There is also a risk that with major retailers like Walmart charting their own safety plans (66), reform of the conditions in the RMG industry may be haphazard and ineffective. For instance, Walmart’s ambitious plan to have an outside auditor inspect and report on 279 factories by 1 June seems an implausible timeframe to work in and would raise questions about the thoroughness of their checks. Indeed, their desire to avoid a legally binding Accord is enough to raise doubts in the minds of many, as is their evasive statement that “they expect the cost of safety improvements to be reflected in the cost of goods they buy.” (67) This confidence in suppliers is perhaps misplaced, as, if they were going to do this of their own volition, they could have done it earlier, when stricter labour laws came into force or when other large-scale industrial accidents like the Tazreen Factory Fire occurred.

In spite of these differing, often competing safety plans, ensuring that such preventative efforts are successful is as important, as assuring prompt and proportionate, livable compensation for workers and their families, whether it be through monetary means or through the provision of skills and training programmes or a combination of both. For Bangladesh to meet international labour standards, prevention is key. As much is recognized in the abovementioned Resolution of 4 May, 2013 which requires the relocation of unsafe factories, the recruitment of additional inspectors and the improvement of health, occupational and structural safety and other vulnerable sectors. (68)

Conclusion

In this Note, I have outlined the methodologies & mechanisms by which workers may make insurance claims for work-related accidents, if available, and dependents may apply for death benefits and injury compensation, under the prevailing labour laws of the country. I have appraised the shortcomings of these options and considered alternate systems of compensation and prevention that can be employed; a few, like the 2013 Labour Amendment and the RMG Retailers’ Accord that are under active deliberation now and others that remain within the academic sphere of discussion but might become more influential in policy circles in the future.

What has become clear, following such an evaluation, is that, aside from those accidents that have received considerable media coverage, a) insufficient steps have been taken thus far to prevent industrial accidents in Bangladesh, b) when accidents occur, the mechanisms for compensation are mired in red-tape and procedural obstacles, c) even when compensation is obtained, it is often insufficient for the purposes of providing anything more than the most rudimentary of needs, and d) greater efforts need to be exercised to rehabilitate injured workers into employment, as part of the ‘compensation’ process. Whatever remedies are available for workers under the current systems, deficient as they may be, it is clear that they are geared more towards competitiveness and industrial peace than towards promoting workers’ protection. (69)

The common argument in favour of the status quo is that increased compensation, like increased wages, breeds inefficiency, thereby driving up production costs, which then passes onto prices, leading to a fall in the sale of the goods in question and ultimately the loss of worker jobs due to a lack of demand. While there is some merit to this line of reasoning, such market-centric arguments are eerily reminiscent of those that were used to justify child labour or not having a minimum wage in the past. It is worth recalling at this juncture that we are all, whether worker, employer, Government official or global retailer, shielded by and bound to uphold certain universal rights, many of which are stated in the Universal Declaration of Human Rights, a Treaty that is accepted as jus cogens under international law:

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” (70)

Upholding such rights through the payment of a livable compensation should not be disregarded because of dubious arguments of “inefficiency” or because higher labour standards kill market competitiveness and are thus, generally, dangerous to the industry itself. While such contentions might be persuasive to the more liberally inclined, it will not be so to the average worker, who does not see any benefit to his/her additional output, in terms of a rise in real wages or living standards. It rings especially false, when one considers the manner in which the cost of living has increased in the past decade, as outlined above. Even in monetary terms, the motivational impact of safe working conditions and ease of access to equitable, fair compensation on workers should not be underestimated, while the positive publicity generated through ‘ethical’ production would allow suppliers to charge higher prices. Global retailers have already expressed an interest in such a system.

In light of this, it is apparent that there is a need for both amendments in the Act, as well as more stringent efforts to ensure compliance on the parts of the employers, the Government and global retailers. In line with the International Labour Organisations Decent Work Agenda (DWA), the Millennium Development Goals (MDGs), the recent multilateral and Tripartite initiatives mentioned above and Bangladesh’s own Constitutional principles, these parties must work towards facilitating a more holistic, regular and comprehensive inspection process, so as to prevent or reduce workplace accidents; instituting a form of workers’ social insurance to alleviate some of the pressure on workers’ wage; removing the impediments that prevent workers from obtaining compensation for injuries arising out of and in the course of their employment; implementing stricter time limits for processing claims for compensation so as to ensure prompt payments; enforcing more stringent penalties on employers that don’t comply with such practices and developing methods & systems to rehabilitate injured workers, so as to provide more effective ‘compensation’ than lump sum payments. For this to occur, there is a need, at the policy-making level, to move beyond the preoccupation with ‘damage limitation’ and seeking to preserve market competitiveness and a (fragile) industrial peace, towards guaranteeing workers’ protection and ensuring them a decent standard of living. It would only be fitting for a country where striving for emancipating toiling workers from all forms of exploitation is a fundamental principle of state policy.

(33) A livable wage is commonly defined as being “a regulated monetary wag at national/sectoral level taking into account the cost of living”, i.e. a salary that a worker and their family can live on, while maintaining a safe, healthy lifestyle and having the ability to deal with emergencies without having to seek public assistance. (Jakir Hossain, ‘Living Wage for Workers’ Economic Security: Rationale for Rights and the Yardsticks of Needs’ Development Synergy Institute Report (Development Synergy Institute: Dhaka, 2009, p.15)